The government has begged suppliers and banks to ease pressure on the struggling Uchumi and Nakumatt supermarkets, even as it works on a structure to revive the country’s retail sector.
Speaking when he hosted a retail sector status meeting in his office yesterday, Cabinet Secretary for Trade, Industry and Cooperatives Aden Mohammed asked suppliers of the two supermarkets to exercise leniency even as the state works with debtors to repay them.
‘’The government cannot afford to watch as the sector crumbles, considering that it contributes Sh5 billion to the country’s GDP while employing at least 8 million people. Let’s work harmoniously to revive this sector,’’ pleaded Mohamed.
Yesterday’s meeting comes on the back of increased court battles by suppliers who are seeking to liquidate Nakumatt Supermarket over rent arrears, loans and unpaid goods.
This has forced the retailer to close a number of its branches across East Africa, with the NextGen Mall branch along Mombasa Road, Nairobi, being the latest causality.
According to sources, Nakumatt owes suppliers upto Sh15 billion, commercial banks are owed Sh8 billion while it has a commercial paper debt of Sh7 billion.
Although the CS did not give out an elaborate strategy on how the government is planning to help Nakumatt to regain its balance, the Trade and Cooperatives Principal Secretary Chris Kiptoo in July this year ruled out the bailout option.
Late last year, the government allocated Sh1.8 billion bailout for Uchumi Supermarket by virtue of being a shareholder.
In January this year, the Treasury disbursed Sh500 million to Uchumi which was used to pay some local suppliers. The retailer is waiting for an additional Sh600 million to clear its Uganda and Tanzania debt. The remaining Sh700 million will cater for other operational costs.
A recent prompt payment report by the Kenya Association of Manufacturers (KAM) in partnership with Suppliers Association of Kenya and Retail Trade Association of Kenya (Retrak) claimed that retailers owed them Sh40 billion.
In the report, the two wondered why retailers were having a cash flow challenge yet goods in the supermarket are bought in cash.
In order to curb future disputes between retailers and suppliers, the ministry has promised to create a regulatory body under its trade department by early next year.
According to Mohammed, the body in partnership with the sector players will develop a code of practice to ensure fair trade.